Michigan governor: Emergency manager is best option for Detroit

Michigan Gov. Rick Snyder tells a room full of invited guests and journalists that he will appoint an emergency financial manager for the City of Detroit during a town hall-style meeting broadcast live on Detroit Public Television. On stage with him are Nolan Finley of The Detroit News and Stephen Henderson of the Detroit Free Press.

DETROIT - Gov. Rick Snyder on Friday declared Detroit's financial problems too deep for the city to fix on its own and said he believes an emergency manager is the best way to reverse the downward spiral.

Calling it a "sad day" but also one of promise, Snyder said he concurs with a review team report released last week that concluded Detroit is in a state of financial emergency.

"It's not hard to justify that conclusion," the governor said during a town hall meeting Friday.

Snyder said he has an emergency manager candidate in mind but would not name that person, noting the city has a 10-day window to appeal that ends March 11. A hearing for a possible appeal has been set for March 12.

Snyder credited city leaders for trying to fix the problem, but said it's clear a consent agreement forged in April hasn't worked.

Today "is a day to call all hands on deck to say there's been too much fighting, too much blame, not enough resources, not enough people working together," he said. "The key answer I believe all of us want to get to is growing the city of Detroit."

Snyder said the city's elected leaders will be able to define their own path on how they operate moving forward. He called it "a great opportunity to be involved." But he's not interested in city leaders yelling and saying things don't work.

"I wouldn't expect they aren't going to have a lot of influence on decisions," Snyder said of those who seek to obstruct progress.

Snyder said he believes an emergency manager can put Detroit on the right financial path within 18 months. After that time, the city council can vote to remove the EM under state law.

The governor said he understands not all problems will be fixed within 18 months, but he wants Detroit to be on that path and then be able to transition out of an emergency manager.

"There are some structural problems that have made this much more difficult and stopped the solutions," Snyder said.

One Detroit resident outside the town hall said she was disappointed by the announcement.

"I don't think it's right at all," Angela Woodmere, 37, said Friday outside the Maccabees Building. "We elected Detroit politicians and Snyder shouldn't be dictating how they run the city."

But another city resident said he sees progress ahead after Snyder's announcement.

"I'm glad to have a light at the end of the tunnel," said Detroiter Tim Gelletly, 34, who has owned a home on the west side for the last 11 years. "There is a real need for an increase in the quality of services for residents and this could be that need met."

Union leaders blasted the idea of emergency management in Detroit.

"When times are tough, it is especially important that decisions are made democratically and locally," the metro Detroit AFL-CIO said in a statement. "Today's announcement by Governor Snyder recommending an emergency manager does a disservice to every Detroit citizen. It will lead to cuts in vital services, which will benefit out of town creditors and make our communities less livable."

Friday's decision marks a watershed moment in Detroit's historic collapse, which has been decades in the making.

Last week, a state review team concluded Detroit's financial crisis requires state intervention "because no satisfactory plan exists to resolve a serious financial problem."

The review team found Detroit's cash-flow deficit is nearly $100 million. That's on top of an accumulated deficit of $327 million. The city also has $14.9 billion worth of unfunded pension and employment retirement liabilities, according to the review team report. In five years, it needs $1.9 billion to begin making payments on the debt.

Once the nation's fourth largest city, Detroit was hailed as an industrial hub with nearly 2 million people. Today, after a half-century of population loss, chronic mismanagement and inadequately funded city services, the move solidifies the city's standing as a model of urban decline.

"In this particular case, you have to in some degree look at it as a hostile takeover," said David Bositis, of the Joint Center for Political Studies, a national think tank in based in Washington, D.C.

"Detroit is a very democratic city and it's being taken over by a very Republican and conservative state government. It's not a good day, but things can change."

Earlier, Detroit City Council members called the decision to appoint an emergency manager premature and said they are doing everything they can to avert the takeover.

"It would be irresponsible for us to not provide some response," Councilwoman Saunteel Jenkins said of a plan council members are compiling to send to Snyder." If they don't accept it, they don't accept it. We have to do everything we can to try to stop (emergency management) from happening."

Councilwoman JoAnn Watson reiterated her stance that the city should pursue a legal challenge of emergency manager law.

"We should not be going and begging. That would be a big mistake," Watson said. "The citizens would not know who to trust."

Greg Bowens, a political expert and former press secretary for former mayor Dennis Archer, said an emergency manager would be a devastating blow for the morale for the people of Detroit.

"In the end, it means the governor does not have the faith in the people of Detroit to govern themselves in a responsible manner," Bowens said. "It means that in some measure a failure of the system to be able to produce the kind of leaders that is needed to hold a city together. The impact that it will have on everything from the elections to the outlook that people have about the future could not be overstated."

Friday's decision makes Detroit the only major city in the country to operate under some sort of state control.

"Emergency management means the death of democracy in Detroit. It also means disaster for Detroit with the track record of the emergency manager," said the Rev. D. Alexander Bullock, president of the Detroit Chapter of the Rainbow Push Coalition. "There should be a hearing on this. The governor should reconsider."

Municipal bankruptcy expert Douglas Bernstein said the step toward reaching fiscal stability has to be made. Detroit can no longer allow the financial problems to go on forever, he said.

"The present situation is intolerable," said Bernstein, an attorney with the Plunkett Cooney law firm in Bloomfield Hills. "(Steps to get finances in order) is recognition you've got a problem and you're on the road to fixing it, rather than continuing to dig a deeper hole."